Wikipedia: Bankruptcy in the United States
U.S. Bankruptcy law changed dramatically in 2005 with the passage of BAPCPA, which made it more difficult for consumer debtors to file bankruptcy in general and Chapter 7 in particular.
Advocates of BAPCPA claimed that its passage would reduce losses to creditors such as credit card companies, and that those creditors would then pass on the savings to other borrowers in the form of lower interest rates. Critic Michael Somkovic asserts that these claims turned out to be false. He charges that although credit card company losses decreased after passage of the Act, prices charged to customers increased, and credit card company profits soared.[10]
Formerly, in a "Chapter 7" bankruptcy, a debtor's "exempt" assets were collected by a trustee and sold. Considering that one filing for bankruptcy essentially had no assets that were exempt from the bankruptcy, it was just considered a wash and there was no seizure of assets.
Note that the advocates of the law claimed that the result would be that the "creditors would then pass on the savings to other borrowers in the form of lower interest rates." Yeah. As it says, their losses decreased, but prices charged to customers increased. Who would have guessed that would be the outcome....?
edit on 11/19/2011 by Ex_CT2 because: (no reason given)
